Concentra Biosciences Acquires Struggling Kronos Bio in $34.8 Million Deal

In a significant move within the pharmaceutical industry, Concentra Biosciences, run by Kevin Tang Capital, has successfully acquired Kronos Bio for approximately $34.8 million. This acquisition marks the latest in a series of strategic moves by Concentra, known for buying out struggling biotechs.

Deal Structure and Financial Details

Concentra's offer includes 57 cents in cash per share of Kronos' common stock, representing a 35% discount from Kronos' closing price of 89 cents on the day before the announcement. The deal also incorporates a contingent value right (CVR), providing shareholders with the potential for additional proceeds based on future asset performance.

The complex CVR structure offers various payment scenarios:

• 50% of net proceeds if KB-9558 and KB-7898 are sold within two years of closing
• Full proceeds from the sale of KB-0742, lanraplenib, and entospletinib if sold before closing
• All cost savings realized prior to closing
• 80% of merger-related cost savings from closing to the second anniversary
• Half of the costs between the second and third anniversary of closing

The deal is expected to close by mid-2025, subject to Kronos maintaining at least $40 million in cash at closing.

Kronos Bio's Journey and Asset Portfolio

Kronos Bio, founded in 2018, initially focused on discovering small molecules for "historically intractable" cancer targets. Over time, the company shifted its focus to developing drugs addressing deregulated transcription for cancer and autoimmune disorders.

Despite its ambitious goals, Kronos faced significant challenges:

• Multiple rounds of layoffs, reducing staff to just 10 employees by November 2024
• Discontinuation of its most advanced drug candidate, istisociclib, in November 2024
• Closure of its California headquarters to conserve funds

Kronos' remaining assets include:

• KB-9558 for multiple myeloma and HPV-driven cancers
• KB-7898 for Sjögren's disease
• Three undisclosed programs in discovery stage

As of December 31, 2024, Kronos reported $112.4 million in cash reserves.

Industry Context and Concentra's Strategy

This acquisition aligns with Concentra's reputation as a "biotech clean up firm," known for acquiring and winding down struggling companies. Recent activities highlight Concentra's aggressive approach:

• Unsuccessful bids for Acelyrin and Pliant, both of which enacted "poison pill" defenses
• Acquisition of Allakos for 33 cents per share following the company's setbacks

The pharmaceutical industry continues to see consolidation and strategic realignments as companies navigate challenges in drug development and market dynamics.